NISM Certifications · NISM-Series-XV: Research Analyst · Introduction to Securities Market
In the Indian securities market, which of the following is the main function of a stock exchange's clearing corporation?
A clearing corporation guarantees and settles trades executed on the exchange. It acts as the central counterparty by novating trades, managing risk and ensuring funds and securities are exchanged, which protects participants from counterparty default.
- AGuaranteeing and settling trades executed on the exchangeCorrect
- BIssuing shares to the public on behalf of companies
- CSetting the listing norms for companies
- DGranting registration to stock brokers
Explanation
A clearing corporation acts as the central counterparty. It novates trades, guarantees settlement and manages the settlement of funds and securities. Issuing shares is done by the issuer with merchant bankers, while listing norms and broker registration are matters for SEBI and the exchange.
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